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Trade Contracts
Introduction to Trade International trade is essential to making money, producing a product and allowing for the globalization of the world. Without it, the nation may struggle with themselves. Trading works in two ways: Imports and Exports. Imports: A good brought into a jurisdiction, especially across a national border, from an external source. Exports: A good or service produced in one country that is bought by someone in another country. Some nations cannot produce certain products, namely resources that cannot be mined or extracted. Example: Oil, bauxite, natural gas and coal. These are essential in producing things like aluminum and fuel. If a nation cannot produce this themselves, it is suggested that the nation seek a trade agreement to import the product. Exporting products sells excess product from the nation at a profit if a good price is negotiated. However, selling a lot of product at a good profit will overheat the sector and increase growth. If not checked, inflation will drive costs up across all sectors and drive approval polls down. This guide will explain the meaning of each sector indicator and what to look for in negotiating a contract. Sectors * Production: % of worldwide production of product * Consumption: % of worldwide consumption of product * Trade balance: Difference between import and export of product, goes down when signing import contracts (But not a bad thing if you cannot produce it. Ex: Bauxite, coal, etc) * Sales: the dollar amount of total sales domestically and abroad of product * Profits: After production and sale, money leftover * Productivity Index: “How much you could produce,” The higher, the better. * Income tax: % of tax income the sector produces in proportion to federal income * Employment: % of employment it holds among your economic activity * Manpower: Number of jobs the sector actually holds in thousands or millions. Cite ‘main production’ found in ‘Finance’ * Sale price: Total price of the product in bulk (Toe, tons). How much your nation's price is on the markets. * Purchase price: Total price on what your nation sells it for (If a nation wants to buy it from you). * Price (tax incl): Price of the product after local, state and federal taxes are applied. Interactive options * Embargo: Select a nation you want to ban the import or export of/to. Beware: Trade organizations will sanction you. Only apply these freely on nations outside of the WTO. * Subsidize: Federal money given to a sector to promote employment and growth of said sector. Also increases research on the sector, increasing its tech level. * Customs duties: Tariffs levied on all nations, no specific way to target anyone yet. A nation can have a maximum of 7% duties across ALL sectors. Use wisely. * Exonerate: Exempts sector from federal and state tax rates, use on sectors who are starting up or are experiencing financial difficulties (When the sector shrinks) * Impose a price reduction: Only accessible on sectors that have value. Raw materials, finished product and other cannot have prices reduced. All food sectors, certain industrial sectors (Pharmaceuticals) can have prices reduced. These are expensive, as the reduction is covered by the government. Note the ‘Price reduction’ data that applies after this measure passes. * Adjust the degree of nationalization: * Sector totally privatized: Default in most Western and capitalized nations. This option allows for total private ownership of the economic sector, corporate entities control employment and production. This is the best option for maximum growth. * Sector with state involvement: This is the best option for minimum gov’t involvement, but maximum profit. Some profits are handed to the government, while private companies still have majority in the holdings. This gives government oversight on the sector. Use for sectors that need assistance, such as failing sectors or sectors that you feel need regulation (Banks, Air transport, Road and rail transport, urban transport…) * Sector under control of the state: The state controls all of the sector’s assets and no private companies hold any shares. This gives the player the opportunity to micromanage the sector, usually having control over manpower and salaries. The government incurs the sectors deficit and surplus. Use for strategic sectors, namely 3G EPR. Trading Contracts in Power & Revolution work in two ways. To make money and to increase production. Imagine a contract as a formal agreement to sell a customer a certain amount of apples or vice versa. The terms of an agreement can be divided into the following categories: * Type: Annual quantity or volume sales/purchase: This is where you decide whether you are going to import or export to a nation. The only thing you need to know is: Sales = Export | Purchase = Import * Product: The product you desire to sell; there are many different types of products to sell and buy, ranging from food to raw materials and manufactured goods, to energy products and electricity. * Price: The price your nation will buy/sell the product at; -During a sale, your goal is to at least get your final price above your nation’s sale price. This will promise you will make a profit off the sale of the product. * Average purchase price: The price at which your interlocutor will purchase the product. If the purchase price is below your sale price, it will be extremely difficult to negotiate a deal. Remember: Sale price higher than purchase! * Volume: The amount of product you are giving/receiving from the contract. There are 6 pieces of information to know: * National consumption: Your nation’s consumption of the product by unit volume. * National production: Your nation’s production of the product by unit volume. * Product already under contract: Your nation’s obligations to other nations on the product. If you sell too much, you will have a sector crisis. * The next three are the same, but with your interlocutor. * Amount: The final dollar amount after volume and prices have been negotiated, the contract will be worth the shown amount of dollars. * Number of years: Commonly, it is told that it is better to import/export on a 1 year contract. However, contracts are calculated annually, meaning longer contracts give you the volume of the contract on an annual basis. Example: China sells the United States 1.5 million automobiles for $25,000 each unit. This will yield $37.5 billion annually. A 5 year term will yield China a total of $187 billion over 5 years. '''NOTE! '''Contracts have major effects on growth and sector profits. Contracts signed with '''a '''higher sale than purchase margins will increase profits. Growth will be encouraged by this. Depending on the sector, employment and corporate taxes will be affected. Check this by looking at the Department of the Economy’s assessment of the contract after a few days of the deal being in effect.